Good for Business

Natural gas energizes business

Commercial entities that are natural gas customers represent a diverse mix of energy users comprised of many different end-uses. The more than 5.4 million commercial customers that use natural gas for space and water heating include businesses and buildings that we use every day such as schools, hospitals, police and fire stations, offices, restaurants, grocery stores, retail outlets and public halls. They are core to the U.S. energy economy and fundamental to our daily lives. Small businesses and the jobs and families they support are America's economic engine and they depend on natural gas. Local distribution companies stand ready to deliver. Read more about how Natural Gas Energizes the Commercial Market.

Characteristics of Commercial Buildings

    • Commercial buildings account for one-fifth of total US energy use, of which natural gas accounts for 18 percent. Retail space, offices, healthcare, and educational facilities constitute the majority of energy used within the commercial sector, and most of the commercial sector's energy is needed for lighting, space heating, ventilation, and cooling.
    • Natural gas use in the commercial building sector has grown 10 percent (weather-adjusted) during the last decade, a result of growth in the overall commercial market. Natural gas consumption in the US commercial sector exceeded 3.5 trillion cubic feet in 2014.

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  • The amount that customers spend on energy has also declined. For example, the average real price commercial customers paid for natural gas in 2016 dropped to the lowest level since 1975, a result of low commodity prices for gas that have been driven downward by the growth in US natural gas production and increased levels of available and affordable domestic supplies.
  • The share of buildings that use natural gas has remained relatively constant across the entire commercial building fleet. This suggests commercial natural gas growth has reflected an expansion of the entire market.
  • Most commercial buildings are relatively small. There is more than 87 billion square feet of commercial floorspace in 5.6 million buildings in the United States (including vacant). Commercial floor space increased 23 percent overall from 2003 to 2012. The number of buildings increased by 14 percent.
  • Half of all commercial buildings constitutes only 10 percent of all floorspace. The median size of a commercial building is 5,000 square feet, though the average is 15,700 square feet. The largest buildings are offices, warehouses and storage, mercantile establishments, and educational facilities.
  • The US building stock is aging. Half of the commercial buildings were built before 1980, and 20 percent of buildings were constructed since 2000.
  • There are many buildings that generate electricity on-site but that do not use natural gas, despite it being used for another application in the building. This represents a key growth opportunity for expanding natural gas use in buildings where service is already present.

Economic Implications

  • Natural gas utility commercial customers have benefited from a reliable lower cost of service. In 2015, commercial customers' utility bills reached a new low of $405 on average, the lowest since AGA began collecting data in 2003.
  • Commercial customers are a core part of local distribution company (LDC) revenue. In 2013, commercial customers accounted for approximately 22 percent of total revenues for natural gas utilities. Total natural gas utility revenue in 2013 was $101.1 billion while commercial customers accounted for $21.4 billion.

Appliance and Building Codes and Standards

  • Codes and Standards play a critical role helping ensure that natural gas applications in the commercial sector are installed and operated safely and reliably. Each state, and often local governments within each state, determine which codes and standards apply to their commercial occupancies.
  • Building efficiency standards affect how a structure is designed and built, and its lifetime energy usage. While there are various state commercial building construction efficiency regulations in use around the country, ASHRAE Standard 90.1, Energy Standard for Buildings Except Low-Rise Residential Buildings, is the most widely adopted minimum.

The Look Ahead

  • EIA projects commercial floor space to continue a long-term increase while total energy consumption intensity declines. However, purchased natural gas for commercial consumption is projected to increase through 2040.
  • In the near term, there are clear opportunities to expand natural gas service to commercial customers:
    • Leverage natural gas as a tool for economic growth.
    • Promote new technologies to improve energy services, lower costs, and reduce emissions.
    • Replace heating oil with natural gas, especially in the northeastern US.
    • Leverage existing efficiency programs to comply with broader economic or environmental policy goals.

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